The vast economic power of China is increasingly under European scrutiny, with an undercurrent of assumption that Beijing will find it in its own interest to shore up the euro.
China is projected to become the world’s number one economy, outstripping the US, within just a few years. Its foreign exchange reserves are the world’s biggest, valued at a level of some 3.2 trillion dollars, and one quarter of that is thought to be euros.
China got this way by sustaining exports at very competitive prices, although many critics complain of frequent, large-scale Chinese dumping, or pricing at below production costs. Low salaries count for a lot, as well as the value of the yuan currency. This is another major irritation. Money watchers around the world feel that Beijing has kept the value of the yuan artificially low against the market-variable dollar and euro.
China’s number one trading partner and largest export market the EU sold more than 113 billion euros-worth of goods to China last year — 38 percent more than in 2009.
The EU in 2010 imported more than 280 billion euros in Chinese goods, which was almost a third more than the year before. A worsening of the European debt crisis would affect economic relations.
The logic is one of supporting a number one customer. From January to August this year, it is estimated that China’s exports to the EU have regressed by between 15 and 20 percent.
Other grounds for China helping Europe’s health are that investments by EU companies in 2010 topped Chinese investment in Europe by some five billion to less than one billion.
Some see the euro crisis as an opportunity for China to boost its global soft power lead, as the size of its holdings is great and the number of worthwhile investment targets is not infinite.
A Chinese foreign ministry spokesman said: “Now, in the past, or in the future… China will always be an important investor in the European financial market.”
There is unofficial talk that Beijing is using its offers of support for the Europeans to press its case for WTO market economy recognition with no more waiting.